Business At An Inflection Point: Will You Evolve Or Reinvent?

Forbes

5 days ago

Business At an Inflection Point: Will You Evolve or Reinvent?
I believe we're witnessing a pivotal inflection point in how businesses operate. Artificial Intelligence (AI) is not merely a tool for optimization; it stands to reimagine how enterprises function. The question we've been discussing frequently with leaders is: Are you going to add AI to what you're already doing and evolve, or are you going to reinvent how you operate altogether?
From what I've seen, AI's influence can be observed along a spectrum. At one end, companies are evolving and implementing AI to improve. It augments existing technology stacks and advances the performance of current systems and platforms. It streamlines workflows and enhances operational throughput. At the individual level, it serves as a co-pilot, amplifying the productivity and decision-making capacity of employees and teams.
But it's at the far end of this spectrum – reinvention – where I believe the most profound potential lies. Here, AI surpasses enhancement and becomes transformation. It enables enterprises to fundamentally rethink core business processes, functional domains, and even the structures and strategies that underpin the organization itself.
Why Reinvention Is So Hard – and So Important
Reinvention is the most daring and potentially the most difficult to carry out. It requires a commitment to doing things differently. One of the significant challenges we encounter in our client discussions is helping leaders envision and anticipate what reinvention will look like.
Many executives struggle to picture how transformation will take shape within their specific context. They're often weighing the consequences of taking a more incremental path, evolving existing business processes or functional areas rather than fundamentally rethinking them.
This is a natural and important consideration. If there is a viable path to evolve the current structure, it often requires less disruption, carries lower risk, and is generally easier to implement. However, you still need to anticipate what that evolutionary path entails. It requires readiness to make tough calls and to invest capital and effort where needed. Companies will need to navigate complex choices around technology, talent, and change management. And they must be able to justify those decisions through tangible outcomes and sufficient returns. As the old saying goes, the juice has to be worth the squeeze.
Still, there's a real risk in avoiding reinvention altogether. If there's potential to completely rethink a process or function – and we ignore it – we're exposing our business to being left behind.
In my view, most companies that delay reinvention will eventually be forced into it – under far less favorable conditions.
Building Scenarios: A Strategic Imperative
At Everest Group, we've uncovered a powerful technique to help leaders navigate this uncertainty: build forward-looking scenarios for both evolution and reinvention.
For evolution, we ask a series of key questions to explore this potential path, such as: What would the business model look like? What are the benefits and required investments? How should the tech stack and people model adapt? What would be the consequences of an evolutionary path? And finally, what are the signals that suggest the industry is trending in this direction?
For any forward-looking projection, the further we look out into the future, the more uncertainty we face. It's much like standing on a horizon; the closer the objects are, the clearer you see them; the further away, the more indistinct they become, and the more you don't understand the context around them. We must constantly monitor new information and adjust our scenarios as the landscape shifts.
These scenarios should be viewed not as a definitive prediction, but as our best current understanding of what the future is likely to hold. As we move forward, it's essential to continuously monitor the signals that reinforce this view, while staying alert to emerging signals that may introduce new variables or shift the trajectory. It's a continuous, forward-looking vehicle that we need to build.
The reinvention scenario also forces difficult but necessary conversations. We ask: Why do we believe this business function can be reinvented? What is the evidence supporting it? What technology and talent shifts are needed? What is the impact on our customers and internal stakeholders, and what are the cascading consequences?
Developing both scenarios in parallel has helped organizations evaluate which path aligns best with their goals or whether a dual-path approach is warranted. However, every firm, until it moves to a reinvention, will be on an optimization or an evolutionary trajectory. One thing companies will have to answer is whether evolution will become reinvention over time, and whether they will have the time to get there.
This approach also allows executives and their teams to make more informed decisions about which path to pursue. And, by continually monitoring key signals, they can build confidence in the direction they're taking and generate the conviction needed to align stakeholders and secure the necessary investment.
At Everest Group, we're actively developing forward-looking scenarios across a wide range of business processes and functions, and creating industry-specific forward-looking models tailored to sectors such as healthcare, oil and gas, and banking. These frameworks are proving to be invaluable in helping organizations navigate this critical inflection point with greater clarity and purpose.
Considerations for the Path Chosen
As businesses look ahead and use these scenarios to guide their strategic choices regarding AI, it's essential to thoughtfully consider the following factors that will influence which path they ultimately pursue.
For customer-facing functions, we often see that the existential threat to the company will not come from failing to evolve. It will come from failing to reinvent. If a competitor reimagines the space and successfully brings a disruptive model to market, think the iPhone, they are no longer just losing share. They are at risk of losing the entire business.
If, however, reinvention is not the path and the path is evolution, failing to keep pace may result in losing ground, but it is a slow erosion, not a collapse. You can still gain or lose share, but the company is unlikely to be phased out.
Likewise, for internal-facing functions, reinvention is less likely to redefine an industry, but it can dramatically shift the economics. If a company's competitors can operate the same functions at a fraction of the cost because they have reimagined how it works, they will widen margins, increase profitability, and potentially shift valuation multiples. This is not an existential threat, but it is a structural one. And over time, it compounds.
What's at Stake?
AI is going to change how we operate our companies. That's not up for debate. The real question is whether we will meet that change with incrementalism or ambition.
In many cases, the answer will be both. We will evolve some functions. We will reinvent others. In my view, the key is knowing which is which – and making that choice deliberately.